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The impact of financial regulation on the stickiness of credit card lending rate: evidence from the USA

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Listed:
  • Ming-Hua Liu

    (University of Macau)

  • Tianyun Liu

    (University of Macau)

  • Keshab Shrestha

    (Monash University Malaysia)

  • Yang Zhang

    (University of Macau)

Abstract

We examine the effect of the U.S. Credit Card Accountability Responsibility and Disclosure (CARD) Act of 2009 on the credit card lending rate pass-through. Our findings show that the Act had no impact on the long-term relationship between the lending rate and funding costs. However, in the short-term, banks were quicker to raise rates in response to an increase in funding costs after the implementation of the CARD Act. Our study shows that financial regulations can have unintended consequences.

Suggested Citation

  • Ming-Hua Liu & Tianyun Liu & Keshab Shrestha & Yang Zhang, 2021. "The impact of financial regulation on the stickiness of credit card lending rate: evidence from the USA," Review of Quantitative Finance and Accounting, Springer, vol. 57(4), pages 1195-1213, November.
    • Handle: RePEc:kap:rqfnac:v:57:y:2021:i:4:d:10.1007_s11156-021-00975-4
    DOI: 10.1007/s11156-021-00975-4
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